Tech Investors: Get In Early On Dropbox Inc.’s Upcoming IPO?

At the end of February, data sharing service company Dropbox Inc. announced its intention to launch an initial public offering (IPO) with the U.S. Securities and Exchange Commission. The company noted it plans to list under the ticker "DBX" and plans to list at some point this year.

In the initial prospectus put forward by the company, Dropbox’s revenues increased more than 30% year over year in 2017, increasing to more than $1.1 billion U.S., from $845 million in 2016. The fast-growing data services firm has grown in necessity to many seeking cloud storage solutions; with could-based storage expected to increase exponentially over time, Dropbox’s premier market position as a leader in this space is likely to generate a hefty valuation multiple upon filing. With valuation multiples nearing an all-time high across the board, early investors who have held firm with the technology start up for decades should get rewarded handsomely.

As we have seen with other IPOs, one of the key motivations for firms such as Dropbox to file for an IPO is for initial investors to be able to take money off the table and generate a return on their investment. Investors will remember what happened to the share price of Facebook Inc. (NASDAQ:FB) upon filing – with employees and shareholders contributing to heavy selling early on, investors may be well-compensated by waiting for a short period of time (two or three quarters) before buying shares of Dropbox, to maximize returns.